Yesterday's WASDE Report: a Non-event, Physical Market Continues Its Upside Mood
Photo by: ASAP Agri
If relying on the very limited evolution of futures CBOT prices after the release of the USDA report, we can easily conclude that this monthly update was a non-event. Today, prices of the main products we look at (corn, wheat, soybean) in the frame of the WASDE update continue to evolve in the bullish trend in place for now 3 weeks.
As for wheat, the global equilibrium is seen as almost unchanged (Global ending stocks +0.6 MMT to 257.2 MMT). This USDA report just confirms the vision of the market, integrating cuts in EU production significantly impacting its export potential (-2.5 MMT m/m). Ukraine is compensating for this lack (+1 MMT m/m) beside Australia (+2 MMT m/m). Australia is definitely seen as the fireman of this report with a production revised up by +2 MMT and ending-stocks reduced to a 5-year low at 2.75 MMT. The market will apply even more emphasis now on the Australian conditions. Indeed, so far so good, but the job remains to be done!
As for corn, steady situation at the global level. One lesson should nevertheless be drawn from this report: the reduction of corn availabilities is widespread to all nearest competitors of Ukraine. Export potential is reduced by -0.4 MMT in Russia, by -0.2 MMT in Serbia but by -0.2MMT in the EU mostly because of Romania and Bulgaria. As the proverb says: “one man’s loss is another man’s gain”, the Ukrainian market should get profit from this situation.
As for soybean, the market even didn’t react to the bearishness the fresh figures let appear. Market operators kept in mind the good figure for US export sales. More than that certainly, operators continue to have a look at the dry pattern over Brazil and not attempt anymore to rely on the 169 MMT production record figure.
Christina Serebryakova, ASAP Agri CEO